Question & AnswerQ&A (BIR REVENUE REGULATIONS NO. 3-97)
Deposit substitutes are alternative forms of obtaining funds from the public, other than deposits, through the issuance, endorsement, or acceptance as debt instruments for the borrower's own account, for purposes such as relending or purchasing receivables and other obligations. These include instruments like promissory notes, repurchase agreements, certificates of assignment or participation, and other similar instruments with recourse authorized by the Bangko Sentral ng Pilipinas for banks and non-bank financial intermediaries.
Debt instruments issued for interbank loans, including those between or among quasi-banks, are not considered deposit substitute debt instruments under this regulation.
The amendment took effect on January 2, 1997.
Effective January 2, 1997, reverse repurchase agreements entered into between the Bangko Sentral ng Pilipinas and any authorized agent bank are considered deposit substitutes.
The Bangko Sentral ng Pilipinas (BSP) is authorized to approve such instruments as deposit substitutes for banks and non-bank financial intermediaries.
The purpose is for the borrower's own account to obtain funds from the public for relending or purchasing receivables and other obligations.
The amendment was signed by Roberto F. De Ocampo, Secretary of Finance, and recommended for approval by Liwayway Vinzons-Chato, Commissioner of Internal Revenue.
Yes, the regulation applies to both banks and non-bank financial intermediaries as authorized by the Bangko Sentral ng Pilipinas.
Designation as a deposit substitute means the instrument is treated as an alternative means of obtaining funds from the public, other than regular deposit-taking, subject to regulatory oversight by the BSP and BIR under applicable rules for debt instruments.
Examples include promissory notes, repurchase agreements, certificates of assignment or participation, and similar instruments with recourse.